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Gloomy forecast for paper sector

European paper recyclers have been warned of gloomy conditions ahead.

On the first day of the Paper Recycling Conference Europe, industry leaders meeting in London heard that continuing global economic crisis would continue to rock the sector.

Per Ove Nordstrom, senior paper expert at McKinsey told delegates recyclers would continue to see falling domestic and export demand and low prices for graphic grades. The structural decline in the market, he said, had been accelerated by the cyclical downturn.

More optimistically, demand for packaging grades would remain stable, he said.

However, many European recyclers were suffering from low margins and high debt levels following a “lost decade” of declining margins.

“If we see a further deterioration of the economic outlook in Europe next year, margins will shrink and the debt burden will increase” for firms, Nordstrom said. “There are some that are doing OK-ish, but generally it’s a pretty bleak picture”.

Nordstrom also warned that falling quality of recycled fibres combined with contamination from commingled collections would lead to less use of recovered paper and greater need for virgin pulp.

Dr Joseph Augusta, managing director of Austropapier, also warned of changes to the supply of recovered paper. Changing consumer behaviour, he told the conference, meant there was a higher proportion of packaging and less graphic paper recovered from households. With falling volumes, he said, this would cause problems in collecting, sorting and quality.

To meet these challenges would require further developments in sorting technology and political awareness of the requirements of recyclers. Augusta said: “Collection is not the purpose of collection. The purpose of collection must be that we have a raw material we can use.” Local councils must realise their collections did not exist to make them money, but to produce materials for industry and they had a responsibility to industry, he added.

Petri Ristola, a director at Metso Paper in Finland, presented research on the impacts of energy from waste on recovered paper markets.

He warned that if refuse derived fuel production grew as expected, by 2020 there would be “interference” with the recovered paper market at price levels up to €150/tonne.

But, his modelling showed, the market should “auto-regulate” to keep the fuel and recovered paper markets in balance.

He predicted flat or falling domestic European consumption of mixed waste paper, and an “even more export driven” market than today.

• Meanwhile, president of the European Recovered Paper Association, Merja Helander, told the Bureau of International Recycling (BIR) conference in Barcelona she was confident paper would achieve end-of-waste status by the end of 2014 at the latest.

 

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